Corporate Social Responsibility is becoming a reality for Nortel's Supply Chain. Corporate Social Responsibility (CSR) is the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life. Elements of social responsibility include financial performance, creation and maintenance of employment, environmental stewardship, employee relations, and investment in community outreach. Therefore in addition to the traditional business reviews of suppliers, Nortel is ensuring that our suppliers have regard to social, environmental, health and safety aspects.

Why are we doing this?

CSR reviews of suppliers have become increasingly important due to many factors in the competitive global environment. Major brands, multinational corporations, and manufacturers have come to understand that their business operations impact the environments and various stakeholders across the globe. The outsourcing of Nortel manufacturing has meant that we no longer manage the people and the processes that produce our products, however, that does not mean that we have disregard and absolve ourselves from ensuring the proper management of those people and the environment. In addition, our customers believe that they should also monitor not only the quality of the products they purchase, but how it was made, by whom and to what social and environmental standards.

Who is managing?

The Nortel CSR Supply Chain Program will be carried out by the Nortel Global Procurement Compliance team, with support from the Portfolio Strategy Teams (PST) along with third party expertise that will provide assessments and audits of workplace conditions on a risk-basis throughout the Nortel supply chain, and drive continuous improvement in the areas of environmental management and workplace labor conditions. The third party has developed and managed responsible sourcing and supplier monitoring programs for a number of Fortune 1000 brands in the varied areas of electronics, apparel, agriculture, toys, footwear, furniture, etc. This well-respected monitoring firm currently conducts over 12,000 annual audits in over 135 countries, and is accredited to various industry certifications, including SA8000, AA1000, WRAP, ICTI, and the FLA.

How is it done?

The Nortel CSR Supply Chain Program incorporates criteria to help identify where risk lies with regard to workplace social, labor, environmental, health, and safety conditions. These criteria are based on numerous factors such as regional practices and enforcement, component/product-type, and volume of Nortel product being produced by a particular supplier or manufacturing facility. Suppliers will be initially selected to participate in a questionnaire based on these criteria, and questionnaire results will further vet suppliers that may have a higher propensity of operating their business in a way that does not comply with Nortel standards, or local legal standards.

The Nortel program is defined as a risk based CSR model and comprises of 4 main steps;



The initial risk assessment process is designed to assess if supplier operations has the potential for CSR risk or not. Suppliers identified with a potential for risk will be further reviewed to determine the level of risk. Suppliers identified as "high-risk" will be chosen to participate in an onsite audit of their workplace practices by our third party auditor. The audits are based on industry standard audit protocol, in order to verify compliance in areas including:

• wages and benefits
• working hours
• forced labor
• freedom of association
• health and safety
• discrimination
• harassment
• age requirements
• environmental management and others.

The audits will include a review of documentation, onsite assessments of environment, health and safety practices, and confidential employee interviews. Upon conclusion, the auditor will compare the findings with Nortel standards and local law, and will discuss the remediation process. As the program progresses, Nortel hopes to better identify and mitigate potential areas of risk throughout the supply chain, and also to capitalize on potential areas of opportunity, whether they be in the form of process improvements, improved relationships with customers, or access to a wider body of shareholders.

In addition to the CSR Supply Chain Program outlined above, Nortel also has the Core Environmental Requirements (CER) initiative which integrates environmental considerations into supply management operations. The CER initiative is applied to all Nortel suppliers.

It is a Nortel requirement for all strategic Electronics Manufacturing Services (EMS), Original Design Manufacturer (ODM), and Original Equipment Manufacturer (OEM) and Component suppliers to obtain ISO 14001 registration. Third party certification of a supplier's management system is evidence of conformance. Nortel also reserves the right to require self-assessments or an assessment by a Nortel representative.

Another requirement of Nortel is that suppliers shall not use substances listed in the Nortel list of Banned substances. Suppliers shall minimize, with the aim to omit, the use of the substances listed in the Nortel Restricted Substance List. Suppliers shall declare to Nortel the restricted substances used or released during the manufacturing process or incorporated into product.

The CER initiative requests suppliers to assess their programs against our expectations and complete a questionnaire, outlining potential environmental issues to Nortel. Nortel has integrated the CER Initiative into the web-based Supplier Self-Profile tool, where existing and potential suppliers are evaluated for their ability to comply with the company's environmental standards. The questionnaire is web-based with supplier environmental information and scoring results supplied back to Nortel.

The CER initiative is part of a number of other initiatives and requirements placed on suppliers, such as the Supplier Business Engagement Model, the Supplier Quality Requirements Manual, the Supply Chain Business Practices Agreement and the Supplier Code of Conduct.

You may proceed to login to the Supplier Self-Profile tool* to input your corporate information that has the Core Environmental Requirements embedded into the tool.

If you have any questions or comments, please contact us at enviro@nortel.com.